Kim Dotcom opposition accused of 'unlawful spying'

Megaupload founder Kim Dotcom may have been the victim of unlawful spying ahead of his arrest for alleged copyright infringement and racketeering offences.

New Zealand prime minister John Key has said that some of the evidence against the internet millionaire was gathered "without statutory authority", and ordered an inquiry into the conduct of the country's intelligence staff.

"I expect our intelligence agencies to operate always within the law. Their operations depend on public trust," said Key.

"I look forward to the inspector-general's inquiry getting to the heart of what took place and what can be done about it. Because this is also a matter for the High Court in its consideration of the Megaupload litigation, I am unable to comment further."

The US authorities shut down Megaupoad in January and is currently fighting to extradite Dotcom so he can stand trial. The prosecution has suffered a number of setbacks since Dotcom's initial arrest.